Replies to This Discussion

Permalink Reply by Two Dogs, Pirate on July 24, 2014 at 2:59

How did Encana take advantage of you?

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Permalink Reply by James W Funk on July 24, 2014 at 3:24

We had a lease with an individual from Texas.  Apparently she refused to become a working partner on a well on our area.  They drilled and were very successful.   Falling back on the old law, we have not received any royalty from this well, although they continue to reap a lot of production each month.   They say we will get income once well reaches payout (probably about 10 years the way they do accounting).  Multiple millions have been pulled from this well.

I do not want to find another well where this happens.  New laws do protect mineral owners in the event of unleased minerals, but want to keep current on happenings.

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Permalink Reply by Skip Peel - Mineral Consultant on July 24, 2014 at 3:53

James, it is unclear to me whether your minerals were under a lease.  You mention a lease with an individual from Texas.  And then later in your post you mention a "new law" that protects unleased mineral owners.  If you have a valid lease, the well operator should be paying you the appropriate royalty regardless whether your lessee is participating or not.  If you are not leased, you are a UMI and will not receive any revenue until the well reaches payout (see link below).  If you are leased, you need to consult an experienced O&G attorney.

http://www.gohaynesvilleshale.com/UMI-Basics

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Permalink Reply by James W Funk on July 24, 2014 at 4:22

Skip, this was almost two years ago now.  I went to an attorney in Baton Rouge who spent some time on this.  We got the lessee in Texas to vacate the lease with us, but Encana says we are not a part until payout.  The whole thing has been frustrating and several say the law is with Encana.  Yes we have somewhere over a half million in minerals on this and the well continue to pay Encana.  They send me the quarterly reports on production and expense but does not look good for us.

I think you are the one who originally told me about the well being drilled an in production.

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Permalink Reply by Skip Peel - Mineral Consultant on July 24, 2014 at 4:31

Did you, or the BR attorney (hope he/she was an O&G attorney), seek a lease from Encana?

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Permalink Reply by James W Funk on July 24, 2014 at 5:56

We were told that since we had a lease with the person in Texas, that our only recourse was through them.  They paid us for the lease originally, but as did not participate, no reason to go after them and would be nothing to gain.   Were then told that we had no recourse to Encana.

If you have someone you recommend who has another angle, I would pursue.  As I note, we have lost over a half million or more from this well which is taking our minerals but not paying us anything.

Thanks.    Jim

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Permalink Reply by Skip Peel - Mineral Consultant on July 24, 2014 at 6:10

James, I'm still confused.  You stated in a previous reply that. "We got the lessee in Texas to vacate the lease with us".  Actually the term for the legal instrument would be a "release".  If you get a release from the lessee and record it with the Clerk of Court in Sabine then you are a UMI and can attempt to negotiate a lease with Encana.  It's hard to comment beyond that without knowing the well you mention. 

I would have expected the BR attorney to make this circumstance more clear.  And to get the lessee to execute a release and to direct you to file it in the public record.  For that reason I wonder if they are an experienced O&G attorney. 

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Permalink Reply by olddog573 on July 24, 2014 at 7:49

If I may jump in here, sounds like what happened an individual approached him and possibly others and leased the property, said individual then did not flip the lease to Encana.  

Back in the day, there were many "individuals" in Sabine Parish doing this.  Some ended up selling their minerals to these individuals because they did not read the fine print.  Some of these individuals were "upstanding" citizens of the community.

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Permalink Reply by Skip Peel - Mineral Consultant on July 24, 2014 at 7:58

An operator is required to honor the terms of a legally executed lease force pooled into a drilling and production unit.  If there was a problem between ECA and James's lessee that was causing ECA not to pay royalty then they would not hesitate to state it and place the blame on the lessee.  However ECA seems to recognize that, 1) James, or his family, own the minerals in the unit, and 2) those minerals are unleased.  Doesn't sound like they sold but I've heard more than a few stories about more than one "upstanding" citizen who attempted to or did take advantage of neighbors owing to big Haynesville Shale money. 

Permalink Reply by Two Dogs, Pirate on July 25, 2014 at 4:52

The OGML was granted to Angela Myers dated 9-15-09. Angela Myers signed the release on 8-21-13 but effective 9-16-09. Something stinks in this deal because there were 11 Lessors signing separate leases for this property and the only release is to James Funk. 

Permalink Reply by BirdDawg, plain ole' idiot on July 24, 2014 at 10:47

That would put me in a "Funk".  lol

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Permalink Reply by 1kw6x71km1v37 on July 25, 2014 at 9:47

Mr. Funk,

You are quite possibly getting stiffed for 200 % of drilling and establishment well costs. Hence, the long wait for your money. This is legal if a tract is leased and the lessee fails to participate in drilling a well. It is quite illegal if you are unleased, however, in which case you must only pay 100 % of actual well costs . It sounds like you are not leased at the present time, and the operator either does not know that, or is using it as a pretense in order to charge you excessively.

I would venture the O&G attorney you used was in over his head on your case. There are certain things that should be done right now to secure your money. It sounds like there is enough money involved to interest a competent attorney. If you cannot find one to your satisfaction, I can provide you with the name of one via private communication, subject to his approval.

Whether or not the operator is gaming you, you really should seek competent legal representation, given the amount of money you mentioned.

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